How to Start an Ecommerce Business: Starting an ecommerce business means choosing a legal structure, registering with your state, picking a platform to sell on, setting up payment processing, sourcing product, and lining up enough cash to survive the first several months before revenue is predictable. None of those steps is difficult on its own. The part founders underestimate is sequencing them correctly and budgeting for the real costs, which run higher than the “$100 to start a store” claims that circulate online.
This guide walks through the process in order, with current pricing and sourcing requirements so you can build an actual budget rather than a guess.
Who This Guide Is For
This is written for someone starting a new online retail business in the United States, selling physical or digital products directly to consumers. It applies whether you plan to hold your own inventory, use a print-on-demand supplier, or work with a dropshipping partner. It does not cover running an existing, established ecommerce operation. That is a different set of decisions around scaling, hiring, and operations.
Step 1: Validate the Idea Before You Spend Money
Before registering anything, confirm that people will actually buy what you plan to sell. This does not require a formal market study. It means checking whether a specific product solves a specific problem for a specific audience, and whether that audience already spends money on similar products.
Practical ways to test demand cheaply:
- Run a small paid ad campaign to a simple landing page and measure click-through and email signups before building a full store
- List the product on an existing marketplace such as Etsy or Amazon before investing in a custom storefront
- Pre-sell a limited batch to gauge real purchase intent, not just interest
Skip this step and the risk shifts from “will this sell” to “how much of my formation and platform spend did I waste finding out it doesn’t.”
Step 2: Choose a Business Structure
Most new ecommerce sellers choose between an LLC and a sole proprietorship. A sole proprietorship requires no state filing but offers no separation between business and personal liability. An LLC creates that separation and is the more common choice once you’re taking on inventory, contracts with suppliers, or any meaningful risk of a customer dispute.
LLC filing is handled at the state level, and the fee varies by state. As examples, Virginia charges $100 and Colorado charges $50 for the same filing, and fees generally run from roughly $35 to $500 depending on the state. Check your own state’s Secretary of State site for the exact current fee before filing, since these figures change and some states also charge an ongoing annual report fee.
This guide describes the general process only and is not legal advice. The right structure for your situation depends on facts a general article cannot know, including your state, your risk exposure, and whether you’ll have co-founders. Talk to a business attorney or accountant before filing if your situation is not straightforward.
Step 3: Register the Business and Get an EIN
Once you’ve filed your formation documents with the state, get a federal Employer Identification Number (EIN) from the IRS. This is required to open a business bank account and to hire employees later, and it lets you avoid putting your Social Security number on vendor and tax forms.
The IRS issues EINs for free, immediately, through its online application, and warns that third-party sites charging a fee for this service are not needed. Form your state entity first; applying for an EIN before your LLC is approved can delay the application.
After you have an EIN, open a dedicated business bank account. Mixing personal and business funds is one of the more common reasons an LLC’s liability protection gets challenged later.
Step 4: Choose an Ecommerce Platform
Platform choice affects your monthly cost, your transaction fees, and how much technical work you’ll need to do yourself. As of September 2026, Shopify’s core US plans are:
| Plan | Monthly (billed yearly) | Online card rate | Best for |
|---|---|---|---|
| Basic | $29/mo | 2.9% + 30¢ | Solo founders, new stores |
| Grow | $79/mo | 2.7% + 30¢ | Small teams, 2 to 10 staff |
| Advanced | $299/mo | 2.5% + 30¢ | Higher-volume, international |
| Plus | From $2,300/mo | 2.25% + 30¢ | Complex, high-volume operations |
Figures per Shopify’s official pricing page, current as of September 2026. These are subject to change and should be re-checked before you sign up.
A new store almost never needs Advanced or Plus at launch. Basic covers a full storefront, unlimited products, and inventory management. The main reason to upgrade early is staff accounts (Basic includes none beyond the owner) or a high enough sales volume that the lower per-transaction rate on Grow pays for itself.
Shopify isn’t the only option. Other established platforms, including BigCommerce, WooCommerce (self-hosted on WordPress), and Squarespace Commerce, are worth comparing on the same criteria: monthly cost, transaction fees, app and theme costs, and how much you’re willing to manage yourself versus outsource. Whichever you pick, get the current pricing directly from the vendor’s site before deciding, since these plans change more than once a year.
Step 5: Set Up Payment Processing
Most platforms, including Shopify, bundle a payment processor into the subscription, but it’s worth understanding the underlying cost. A widely used independent processor, Stripe, charges a standard rate of 2.9% plus 30 cents per successful US card transaction online, with additional charges for international cards, currency conversion, and manually entered payments. Using your platform’s built-in payment processor (Shopify Payments, for example) instead of a third-party gateway usually avoids an extra transaction fee layered on top.
Budget for these processing fees as a real cost of doing business, not an afterthought. On a $30 order, a 2.9% plus 30 cents fee is about $1.17, roughly 3.9% of the sale, a meaningful bite for a low-margin product.
Step 6: Source Your Product
How you source product shapes your margins and your cash needs more than almost any other decision.
- Hold your own inventory. Higher upfront cost, but the best margins and the most control over quality and shipping speed.
- Print on demand. No inventory risk, but thinner margins per unit since a third party produces and ships each order.
- Dropshipping. Lowest upfront cost, but the least control over shipping times, product quality, and customer experience, and typically the thinnest margins.
- Wholesale or manufacturing partnership. Requires the largest upfront commitment, usually through minimum order quantities, but can produce the strongest margins at scale.
There’s no universally correct choice. A founder testing an unproven product idea with limited cash has a different calculus than one who’s already validated demand and is ready to commit to inventory.
Step 7: Fund the Startup
Many ecommerce startups begin with personal savings or revenue reinvestment, since the ongoing costs (platform fees, ads, inventory) are modest enough to bootstrap compared to, say, a hardware startup. When outside funding is needed, common early-stage sources for a small ecommerce business include:
- Personal savings or a 0% intro-APR business credit card, understanding the risk of carrying that debt personally
- SBA microloans, which provide loans up to $50,000 through nonprofit intermediary lenders, with an average loan size of about $13,000 and interest rates generally between 8% and 13%, as of the SBA’s current published guidance
- Friends and family funding, typically documented with a formal loan agreement or equity stake to avoid disputes later
- Revenue-based financing or platform capital programs, such as Shopify Capital, which extend funding against future sales once you have some transaction history
An SBA microloan cannot be used to pay off existing debt or to buy real estate; it’s designed for working capital, inventory, and equipment. If you’re applying, budget for the intermediary’s fee, which can run up to 3% of the loan amount on top of closing costs.
A Hypothetical First-Year Cost Example
The numbers below are a hypothetical example only, not a guarantee of what any specific business will spend. Use them as a framework for building your own budget, not as market data.
A solo founder launching a basic apparel store might budget:
- LLC filing fee: $50 to $100 (varies by state)
- EIN: $0 (free through the IRS)
- Shopify Basic, annual billing: $29/month, or $348/year
- Starter theme and a handful of paid apps: $200 to $600/year
- Initial inventory run (100 units): $1,500 to $3,000, depending on the product
- Product photography and basic branding: $300 to $1,000
- Launch ad budget (first 90 days): $1,000 to $3,000
That lands the all-in first-year cost somewhere between roughly $3,400 and $8,000 for a lean, inventory-based launch, before any ongoing ad spend beyond the first 90 days. A dropshipping or print-on-demand model would cut the inventory line to near zero but usually needs a larger ad budget to reach the same order volume, since per-unit margins are thinner.
Common Mistakes That Sink New Ecommerce Startups
- Skipping demand validation and building a full store before confirming anyone wants the product
- Underpricing to compete on cost alone, which leaves no margin after platform, processing, and shipping fees are subtracted
- Committing to large inventory orders before the product-market fit is proven
- Ignoring sales tax obligations across states where you have nexus, which can create a real compliance problem as volume grows
- Mixing personal and business finances, which complicates both bookkeeping and the liability protection an LLC is supposed to provide
